Oil Slips Over Anticipated OPEC+ Supply, Russia-Ukraine Ceasefire Talks
Oil prices declined on Monday as the market weighed potential changes in supply from the Organization of the Petroleum Exporting Countries and allies (OPEC+), while also considering the progress of ceasefire talks aimed at ending the Russia-Ukraine conflict.
Analysts speculate that any breakthrough in the ceasefire discussions could lead to an increase in Russian oil exports to global markets.
As of the latest update, the OPEC basket of twelve crudes was priced at $74.12 per barrel, up from $73.65 previously reported by the OPEC Secretariat. Meanwhile, Brent crude futures fell 25 cents, or 0.4%, to $71.91 per barrel by 0409 GMT, and U.S. West Texas Intermediate (WTI) crude dropped 20 cents, or 0.3%, to $68.08.
Both Brent and WTI saw gains on Friday, recording a second consecutive weekly increase, supported by new U.S. sanctions on Iran and OPEC+’s latest production plan, which raised expectations of tighter supply.
A U.S. delegation is set to meet with Russian officials on Monday, following talks with Ukrainian diplomats on Sunday, to push for progress on a ceasefire in the Black Sea and broader efforts to end the war in Ukraine.
OPEC+ and its allies, including Russia, announced a new schedule on Thursday for seven member nations to make further oil output cuts to compensate for exceeding agreed-upon production levels. This will more than offset the monthly production hikes planned for next month.
In February, BP’s CEO Murray Auchincloss announced plans to reduce investment in renewables and increase spending on oil and gas.
OPEC+ has been cutting output by 5.85 million barrels per day, or about 5.7% of global supply, in a series of steps since 2022 to support oil prices. On March 3, the group confirmed that eight of its members would implement a monthly increase of 138,000 barrels per day starting in April, citing improved market fundamentals.
Market participants are also closely monitoring the impact of new U.S. sanctions on Iran, announced last week. Sentiment around oil prices has recently improved due to concerns over supply risks from U.S. sanctions on Iranian exports and some optimism that potential U.S. reciprocal tariffs may be less severe than anticipated. However, the overall demand-supply outlook remains uncertain, according to IG’s Yeap.
In the near term, Iranian oil shipments to China are expected to decline following new U.S. sanctions on a refiner and tankers, which are likely to increase shipping costs. Nevertheless, traders expect buyers to find ways to keep some volume flowing, despite the challenges.
